The 4 Best Female CEOs to Bet On

Female CEOs represent just 49 of the 1,000 largest companies[1] in America. Despite the disparity, there are some truly great chief executives to choose from. Who are the best female CEOs in America?

Sallie Krawcheck just might have the answer. A big believer of women in business, she acquired 85 Broads[2], the professional women’s network that has since been renamed Ellevate, back in May, 2013. Now, she has announced[3] the Pax Ellevate Global Women’s Index Fund (PXWEX[4]), a mutual fund based on the Pax Global Women’s Leadership Index, which seeks to invest in companies doing a good job advancing women’s leadership.

This isn’t just some altruistic effort on Krawcheck’s part. A 2011 study[5] by Catalyst indicates that companies with three or more female board members seriously outperformed companies with no women on the board. Sure, there have been some colossal failures when it comes to female CEOs — think Carly Fiorina[6] and Andrea Jung[7] — but in all the years I’ve been covering business I’ve found women executives tend to be far more collaborative than men and far less Machiavellian in their actions.

There will come a time when the idea of discussing the best female CEOs won’t be necessary, because they’ll be a bigger part of the business landscape. Until then, let me put the spotlight on four women who are making their shareholders a bucketful of money.

Best Female CEOs #4 — Susan Cameron (Reynolds American)

Susan Cameron is back in the saddle, running Reynolds American (RAI[8]) again after a two-year hiatus[9] to recharge her batteries and spend more time with her family. Cameron’s last stint had her running RAI for seven years until her departure in February 2011.

The largest RAI largest shareholder is currently British American Tobacco (BTI[10]) at 42%. The moratorium[11] that prevents BTI from buying RAI shares is expiring at the end of July, so it seems logical that BTI will acquire a majority stake or even 100% control of the Winston-Salem company. Cameron served as Brown & Williamson’s top executive until it was acquired by Reynolds American in 2004, when she was promoted to head the entire company.

With a solid understanding of the cigarette business, Susan Cameron is the perfect person to take over for retiring CEO Daan Delen. When she departed the company, Cameron left the business in excellent financial shape. Now that it appears BTI will come courting, it’s also appropriate to think RAI will take a run at Lorillard (LO[12]). Whatever happens, it’s good for shareholders that one of the best female CEOs anywhere is running the show.

Best Female CEOs #3 — Mindy Grossman (HSN)

Mindy Grossman has done a marvelous job at the helm of her company and should be considered in any discussion about the best female CEOs in America. In fact, she was a close contender for the No. 2 spot.

Grossman came to the Home Shopping Network after a long career[13] at both Nike (NKE[14]) and Ralph Lauren (RL[15]). Despite Grossman having little experience in television, Barry Diller hired her in 2006 as HSN’s eighth CEO in 10 years. Joining a company that was downtrodden and badly in need of pumping up, Grossman went in and changed the culture from top to bottom, including taking it public in 2008. Since being spun-off by IAC/Interactive (IACI[16]) in August 2008[17] HSNI stock is up nearly 370%. Barry Diller clearly made the right call.

Best Female CEOs #2 — Laura Alber (Williams Sonoma)

Laura Alber spent 10 years at Wiliams-Sonoma (WSM[18]) in various positions before replacing company veteran Howard Lester as CEO in May 2010[19]. Since she took charge, WSM stock hasn’t had a single year of negative returns. In fact, since the beginning of May 2008, WSM stock has achieved a cumulative total return of 190%! That’s more than 100 percentage points higher than the SPY.

There’s no question that WSM stock has performed admirably during her tenure as CEO. However, a lot of that has to do with its business model and the work Alber has put into its e-commerce business, which represents 48% of revenue[20]. As a result, Williams-Sonoma’s margins[21] are higher than ever. With comparable store sales looking good, WSM’s future is bright.

Like Grossman, Alber must be considered one of the best female CEOs in America. But Alber edges out Grossman (barely), due to superior stock performance.

Best Female CEOs #1 — Carol Meyrowitz (TJX Companies)

Meyrowitz has worked for TJX Companies (TJX[22]) for the past 31 years[23]. Since she became CEO in January 2007, TJX stock has achieved an annualized total return of 23% — more than 15 percentage points higher than the SPDR S&P 500 ETF (SPY[24]). An even better indication of the job she’s done is the fact that TJX stock has beaten its apparel store peers[25] in six of the seven years since Meyrowitz took the top job. Shareholders have no doubt that she’s one of the best female CEOs — and one of the best CEOs, period.

From a numbers perspective, you can’t help but admire her. When she took over, TJX had annual revenues of $17.4 billion and operating income of $1.3 billion. Fast forward seven fiscal years and its revenues are $10 billion higher with operating income almost 200% higher at $3.4 billion. TJX has 3,252 stores in the U.S., Canada and Europe and plans for an additional 1,900 in the future, so its top- and bottom-lines[26] can only get bigger and better. Turning inventories more than 13 times a year, it keeps the product on the floors fresh and new.

TJX is considered by many to be one of the best-run retailers[27] in America. However, if the numbers don’t convince you, consider that TJX repurchased 24 million of its shares[28] in fiscal 2009 at an average cost of $15.43 per share (adjusted for 2-for-1 split in 2012) — a level that hasn’t been seen since. Timely capital allocation is the hallmark of good companies.

One final thought: TJX has 11 board members and four (including Meyrowitz) are women. For my money, Meyrowitz has to be considered one of the best female CEOs in the world.

As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.

Endnotes:

49 of the 1,000 largest companies: http://www.catalyst.org/knowledge/women-ceos-fortune-1000